Get Started With Forex Trading Basics

Forex Basics

The Foreign Exchange market - also known as Forex or FX - is the world’s largest financial market. Trading Forex can be exciting, rewarding and - if you’re disciplined about applying sound trading principles - lucrative.

This page provides you with some essential information to help you understand the basics of Forex trading, including:

What is Forex trading?

What are the attractions of Forex trading?

Who should trade Forex?

What tools do you need to trade Forex?

How do you get started with Forex trading?

What is Forex trading?

At its most basic level, when you place a Forex trade you’re hoping a currency is going to move in the direction you want it to, either up or down, relative to another currency.

For example, you might think the Euro (EUR) is going to increase in value against the Australian dollar (AUD) so you could place a trade to buy the EUR/AUD currency pair. If the Euro rises you would make a profit; if it drops you would incur a loss. Conversely, if you thought the Euro was going to decrease in value you could place a trade that would benefit from that price movement.

Online trading platforms make trading very simple as they provide access to trading tools, analytical resources and education material. Before launching with a live account, traders should spend time familiarising themselves with the way the Forex market works and establishing a realistic trading strategy based on their individual goals.

What are the attractions of Forex Trading?

There are plenty of reasons why people choose to trade Forex, from wanting to earn some extra income to pursuing a new career. Here are three of the main reasons our clients enjoy Forex trading:

Markets are open 24 hoursWith different market opening hours around the world, you can trade currency 24 hours a day, 5 days a week. This generally suits traders who work during the day as they’re able to trade at home in the evenings. It also means you don’t experience overnight gaps in the market.

Forex is low costWhen you trade Forex, instead of paying a commission like you would with shares, you pay a very small mark-up to the price called the Spread. Typically, the spread is only a fraction of a cent for each dollar you trade.

Forex allows you to start smallWhen you begin Forex trading you can start at a very small size. And with small trades, your commissions are also small - meaning, unlike stocks, your profits don’t get eaten up by commission.

Who should trade Forex?

It doesn’t matter if you’ve never traded before, are a seasoned pro, have a lot of time to trade or only a little - Forex trading offers versatility and opportunity for everyone. Forex trading is particularly popular for the following:

New traders getting started in the marketsDay traders placing several trades a daySwing traders holding trades for a few daysCarry traders holding positions for weeks or monthsTraders who like the convenience of mobile trading

What tools do you need for Forex Trading?

It’s easy for new traders to spend a lot of time researching which trading platform to use or looking for the latest technological solution. The reality is a new trader doesn’t really know what they are going to need until they uncover their trading style. This means it’s better to begin with the basics and focus on learning enough to get started with a minimum of risk.

As an introduction, a new trader could consider starting with the following basics:

An online Forex trading platform with charting options, such as MT4A demo account that lets you practice trading with virtual money, at no riskTutorials like How to use your platformSome basic Forex educationAs you advance your trading, the following tools may be of use:

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